Fresh partnership deed after a partner's retirement showed a new firm, so two periods' income could not be aggregated.

Where one partner retired and the remaining partners executed a fresh partnership deed, the existence of a new firm or mere continuation of the old firm depended on the surrounding facts, including the two deeds and the parties' conduct. In the absence of evidence that the appellate finding was unsupported or that the arrangement was a sham, execution of the fresh deed was prima facie proof of a distinct new partnership. Aggregation of the income of the two periods was therefore not justified, and the issue was decided in favour of the assessee.

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Issues: Whether the income of the two periods, before and after the retirement of a partner and the execution of a fresh partnership deed by the remaining partners, could be aggregated for assessment on the footing that only a change in the constitution of the old firm had occurred.

Analysis: On the facts found, one partner had retired and the remaining partners executed a new instrument of partnership. The existence of a new partnership or the continuance of the old one is a question of fact depending on the surrounding circumstances, including the terms of the two partnership deeds and the conduct of the parties. In the absence of any material showing that the finding of the appellate authorities was unsupported by evidence or that the new arrangement was a sham, the execution of the fresh partnership deed was prima facie proof that a distinct new firm came into existence.

Conclusion: The aggregation of the income of the two periods was not justified, and the answer was in favour of the assessee.

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